STAFF NEWS & ANALYSIS
Golden Opportunity: Post Brexit, Banks Around the World Ponder Opening the Money Taps
By Daily Bell Staff - June 29, 2016

Brexit — how will central banks respond? Policymakers’ existing struggle with low productivity and high debt has become more complicated –Financial Times

This article provides us with a useful survey of what central banks are going to be doing to confront the Brexet-initiated downturn.

Start with the Bank of England.  Governor Mark Carney acted quickly to provide liquidity by injecting £3.1bn into banks just after Brexit.

Nonetheless, the pound dropped hugely and UK equities plunged too. The next possible step is a rate cut but the falling pound has already initiated price inflation and a rate cut would add inflationary pressures.

Depending on what the numbers show, the BOE could not only cut rates, it could re-initiated quantitative easing.

When it comes to the Fed, the potential hike that Janet Yellen drones on about on a regular basis is probably off the table.

Despite its troubles, the dollar remains the currency of choice as a safe-haven and post-Brexit has risen a good deal.

That means Yellen is under even more pressure not to raise rates, thus strengthening the dollar against other currencies even more.

Over in Europe, ECB head Mario Draghi is sticking to its form of QE and recently he chopped rates.

But the glimmers of what Draghi thought was going to be a recovery seem to have been snuffed for the moment by the stock downturn that took place after Brexit.

Now Draghi may have to cut rates further and expand QE.

Over in Japan, Brexit has shoved capital into the yen, raising its value relative to other currencies. But FT expects that the Bank of Japan could cut rates among other options.

We can see from this abbreviated roundup that central banks are doing what they do best when confronted with a crisis: print more money.

The business cycle has turned away from stocks in any case and Brexit is merely an additional example of that.

Jim Rogers sees the promise in the dollar as a safe haven during these difficult times, and Jim Rogers is one of the world’s most savvy commodity traders.

But you may also wish to consider judicious exposure to gold and silver both in physical and paper form.

Physical metals held safely out of harm’s way, but not in a bank where it would be subject to confiscation, may provide solid solvency in times of great crisis.

But even great crises take time to develop. One way to capitalize on tumultuous times is to gain exposure to selected junior miners.

Of course, you need to be selective and cautious. But if chaos really does mount in Europe and the West, the metals sector will soar and juniors have terrific leverage in such circumstances.

One mining company you may want to examine is a new sponsor of ours, Golden Arrow. The CEO is Joe Grosso. You can see an interview we did with him HERE.

Golden Arrow is partnered with a well-known mining firm Silver Standard in exploiting what could be a major silver discovery.

Miners are likely still cheap, relatively speaking, and silver has a long way to travel to reach parity with its historical ratio.

Conclusion: Whether you are invested in juniors or not, silver should be considered for at least a modest part of your portfolio along with gold.

If you have questions about Golden Arrow, you can reach representative Shawn Perger here: Shawn: 1-800-901-0058 or 778-686-0135. See the website HERE.

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  • Praetor

    One thing to say! Thanks Britain, the PMs are back in vogue!!!

  • nameless

    Yep, the importance (urgency) of physical gold and/or silver possession cannot be overstated at this point. I feel that by mid to late August all retail stocks of gold and silver may become unobtanium. When we see the silver spot price advancing through the upper 30s (USD), times up, its nearly all backordered. Watch silver daily… it’ll be going up in price in lurches these next few weeks during July and beyond. Once retail is backordered, street prices will rocket. The wise will not sell at any price.

    Miners are going to the moon too. We won’t be waiting long for them to fly either, maybe only a couple more weeks… or three, before the public makes notice of them. Many of the juniors will astonish.

    “When it comes to the Fed, the potential hike that Janet Yellen drones on about on a regular basis is probably off the table.”

    I respectfully disagree with that observation TDB staff. My reasons are three:

    Note all the work that the fake alt-medias have done recently (since the first rate hike last December) on their paintings of Yellen acting clueless and being inept in decision making in her job. Its been a consistent (nitpicking) meme during each weekly news cycle to bash Yellen in particular, along with the Fed. They haven’t been wasting energy and ink on those paintings for no reason.

    Secondly, we still have the long running alt-medias “Fed Mistake” promotion in limbo, along with a recent alt-media ramp up in frequency of their general Fed bashings. The MSM has also just picked up the general Fed bashing promotion (hurriedly, neglecting to setup strong, plausible reasons why?) so that could indicate that the mainstream is positioning for the Fed Mistake to play out very soon.

    Lastly, we are “expecting a trigger event” (the alt-medias been screaming that for a long time too) here in the USA that will tip the country into a pattern of economic and financial crisis. Brexit was the trigger event for instabilities in Europe. A USA trigger following the European trigger by only a few weeks would be awful wouldn’t it?

    This is what I anticipate:

    Yellen will announce a rate hike at the July FOMC meetings despite “obvious signs” (as the medias will proclaim) of continually deteriorating conditions. A “FED Mistake” manifest large. All those paintings… now Rembrandts!

    Ohhh…. …the drama… OH!

    Refuse proceeds to hit the ventilators in the USA and reverberates around (or across, for you flat earthers) the planet! Again!

    Yellen is persecuted in the medias and thrown under (scapegoated) the bus. Meet Stanley Fischer, Yellen’s handler at the Fed all along, as Obama nominates a new Fed boss. Stanley is a dual Israeli/US citizen. That should seed further revolutionary anger huh…

    If this little subscript can be stuffed into the greater one unfolding now, might it fit nicely?

    Drama. Get used to it.

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